National Post (National Edition)
Sea miner insists it has enough cash despite missing US$200 million
The Metals Company has enough cash to complete the “important work” needed to secure a permit to mine deep in the Pacific Ocean, according to its executive chair, despite an investor's failure to hand it an agreed US$200 million in funding.
Gerard Barron said the Vancouver-based deepsea miner could finance its operations until the third quarter of 2023, when it expects to apply for a licence to collect so-called nodules, or rocks, containing energy transition metals such as nickel and copper from the seabed.
Rules to allow deepsea mining in international waters have yet to be agreed by the UN-backed International Seabed Authority, although a regulatory framework to allow permit applications is expected in July 2023.
“On the financing side, do I wish I had another US$200 million in the bank? Of course. But I'm not overly concerned about it because ... I've got enough money to complete the important work,” he told the Financial Times.
TMC, formerly known as DeepGreen Metals, went public on the Nasdaq in September through a special purpose acquisition company, waiving an agreement to raise at least US$250 million after it received just US$110 million from outside investors.
Two groups, Ramas Capital Management, a littleknown private equity firm run by former JPMorgan Chase analyst Ganesh Betanabhatla, and Ethos, a San Francisco-based private equity firm, failed to stump up the cash they had promised.
Attempts to secure the funds are continuing. TMC has filed a lawsuits against Ethos and Ramas, which signed up to invest almost US$200 million in the lossmaking company.
“In one case we have a high probability (of success) ... unfortunately, in the larger one (Ramas), we are starting to lose confidence. So we have referred the case to the Department of Justice and the FBI,” Barron said, defending the company's processes.
“They (Ramas) put forward a large pile of documents as part of the due diligence process, including limited partnership agreements, which they put forward to our bank and lawyers. It appears they may not have had the cash they showed they had.”
Ramas and Ethos did not respond to emails seeking comment and they have yet to file defences against the claims, according to U.S. court filings.
Since TMC revealed in early September that it had not received funding from Ramas and Ethos its shares have sunk to less than US$3.70, hurting investors who bought in at US$10.
Some investors do not believe the US$113 million of cash it had in the bank at the end of September will be enough to get it through to the third quarter of 2023, citing cost projections given by the company at investor presentations in March.
TMC has also been attacked by short seller Bonitas Research, which claims the company overpaid for a key asset and artificially inflated exploration spending, giving investors “a false scale of its operations.”
“We are an SEC (regulated) company and not a single word in that document caused us any concern,” Barron said when asked about the allegations in the interview.
TMC, which has a deal to sell some of its nickel and copper to Glencore PLC., says two of its exploration areas in the Clarion-Clipperton Zone of the Pacific Ocean contain enough resources to power 280 million electric vehicles.
Opponents of deepsea mining say that it would result in the loss of biodiversity and functioning ecosystems, while scientists say there is a lack of data to assess the risks.
BMW AG, Volvo AG and Google owner Alphabet Inc. are among companies that have said they will not buy metals produced from deepsea mining until the environmental risks are better understood.